The NCLT Principal Bench ruled that the assignment of avoidance proceedings and residual assets during liquidation permits dissolution when no further assets remain for distribution.
Assignment of Not Readily Realisable Assets Valid for Dissolution
The National Company Law Tribunal (NCLT) Principal Bench has established that the assignment of avoidance proceedings and residual assets during the liquidation process is a valid ground for dissolution. This ruling comes in the context of cases where no further assets are available for distribution to creditors.
The bench reasoned that the liquidation process includes various steps leading to the final dissolution, and once the assets have been accounted for, the dissolution should streamline the resolution process. The NCLT emphasized the importance of maintaining an orderly process for the final settlement of corporate debts under the Insolvency and Bankruptcy Code (IBC).
As a result, practitioners should note that the presence of non-realisable assets does not indefinitely impede the dissolution of a corporate debtor. The ruling reinforces the procedural expediency sought under the IBC, allowing for timely resolution and the closure of insolvent entities.
Citations
- NCLT Order (2026) 1 NCLT 1
